Oil drops thanks to high US output

The price of oil fell below US$102 a barrel Thursday after official figures showed U.S. crude production at a 28-year high and stockpiles rising again.

By early afternoon in Europe, benchmark U.S. crude for June delivery was down 43 cents at US$101.94 a barrel on the New York Mercantile Exchange. On Wednesday, the Nymex contract rose 67 cents to close at US$102.37.

Brent crude, a benchmark for international oil grades, was down 15 cents to US$109.16 a barrel on the ICE Futures exchange in London.

Global supplies rose by 700,000 barrels in April over March, to 92.1 million barrels a day, with over half the increase coming from OPEC members like Iraq and Saudi Arabia, the Paris-based IEA said.

“Yet crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year,” the IEA said in its monthly Oil Market Report. “While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above-ground hurdles that have plagued some of its member countries lately.”